What could be more of an honor than knowing your family is involved in and dedicated to your business?
After all, you’ve put your heart, soul, and dollars into putting it on the path to success. There’s comfort in knowing your spouse and your heirs value what you’ve built and want to see it grow and prosper.
But do they have the peace of mind they need as well?
If something were to happen to you, would your family have the financial means to continue operating your business?
Keeping your business in the family with business continuation life insurance
Business continuation insurance is one of the four main types of business life insurance available to entrepreneurs.
You might argue that all types of business life insurance are for the purpose of business continuation. My focus in this post, however, is to speak to how it can help a business owner’s family maintain a business.
With a business continuation life insurance policy, you can ensure your heirs have the funds they’ll need to pay expenses and continue operating your business. If you were to pass away, it would ideally be a part of a well-thought succession plan – something necessary to avoid misunderstandings and undue conflict during an already difficult time.
A business continuation policy could make the difference between your business surviving or failing.
Business continuation life insurance can help your heirs afford to…
- Pay down business debt.
- Get training to ensure they have the skills and knowledge necessary to run the business.
- Find and recruit staff if necessary.
- Financially cope if company sales or productivity suffer after your death.
As with the other types of business life insurance, you can find either term life insurance or permanent life insurance (whole or universal) policies to protect your business and your family. From an affordability standpoint, term life insurance offers more flexibility and lower-priced premiums so they’re more affordable if you’re budget conscious.
It pays to plan
The majority of family-owned businesses in the United States don’t survive into the second generation. Only about 30 percent do, and just 12 percent go onto the third generation.*
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That’s why it’s so important to have a formal business succession plan in place that includes business continuation life insurance. Not only should you consider talking with a qualified, trusted insurance agent, you should also think about enlisting the expertise of an attorney familiar with the challenges family-owned businesses face.
*Source: Family Business Institute